Credit card debt reduction service advertisements.

Depending on which radio station I am tuned into I am hearing a large number of advertisement broadcasts for people who are struggling with credit card debt. I don’t hear nearly as many in Australia so I wonder what the economic drivers for it are. Is credit card debt worse in the USA than it is in Australia?

I don’t know how accurate these figures are but according to CNN there was a 315% increase in credit card debt between 1989 and 2006. I wonder if that is adjusted for inflation in wages. And this article on Ask Yahoo! suggested that in 2002 that approximately half of all credit card holders pay only their minimum monthly requirements.

To be honest, I think that Dave Ramsey has a point when he says there is no such thing as responsible credit card use. I have a (low rate no frills) credit card and am lucky enough to be able to pay it off to zero each month. That means that I seldom pay any interest on the card (so in that respect I am a bad customer), but because I tend to conduct a few international transactions – slugged anywhere between a few cents to a couple of dollars each time – all the time when I am touring in the USA.

Unfortunately, it seems like we are destined have to pay for the privilege of spending our own money at the same rate as we pay for spending someone else’s money – even if I have a debit card because my pain is actually the international fees not the interest.

I do wonder about debt reduction services though, they obviously aren’t doing it out of the kindness of their own hearts. They seem to negotiate payment of debt at a certain number of cents in the dollar which sounds a lot like declaring bankruptcy to me – do you ever really want to take that option? It seems like that would be an option of last resort.

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